Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Whether income taxes paid to the Government of Taiwan are available for foreign tax credits
Position: Yes
Reasons: Interpretation of paragraphs 126(1)(a) and 126(2)(a) of the Income Tax Act
XXXXXXXXXX 1999-000975
S. Leung
November 17, 2000
Dear Sirs:
Re: Foreign Tax Credit
We are writing in response to your facsimile transmission in which you requested our opinion as to whether income taxes withheld in Taiwan are available for foreign tax credits in computing Canadian income tax payable.
Subject to subsections 126(4.1) and 126(4.2) of the Income Tax Act (the "Act"), to the extent that such a tax is an income or profits tax and a final tax paid by a taxpayer to the government of Taiwan
(i) in respect of the income of the taxpayer from any business carried on by the taxpayer in Taiwan and it is not a tax that is excluded by virtue of paragraphs (a) and (b) of the definition of "business-income tax" under subsection 126(7) of the Act, or
(ii) that was not included, deductible or deducted as specified in paragraphs (a) to (c) of the definition of "non-business-income tax" under subsection 126(7) of the Act and is not excluded because of any paragraph (c.1) to (i) of that definition,
such tax would be available for the purposes of computing any foreign tax credit to be deducted from Canadian income tax payable by the taxpayer on income sourced to Taiwan.
As stated in paragraph 22 of Information Circular 70-6R3 dated December 30, l996, the opinions expressed in this letter are not rulings and are consequently not binding on the Canada Customs and Revenue Agency.
Yours truly,
for Director
Reorganizations and International Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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